More Apple Losses: $708 Million

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More Apple Losses: $708 Million

Pulling no magic rabbits from its battered hat, Apple Computer on Wednesday announced "disappointing" results for the company's fiscal 1997 second quarter, while promising better news for the rest of the year.

"We feel the worst is behind us and our strategy is on track," Apple CEO Gil Amelio said in a conference call to announce the company's total loss of US$708 million for this quarter. Operating losses for the quarter were $186 million, while the total loss was bloated by charges of $155 million for the restructuring announced last month and the $375 million write-off for the February acquisition of NeXT Software.

Sticking to their reorganization plan, the company's chief executives emphasized Apple's commitment to streamlining its business, simplifying its product line, and delivering "great product." Some 1,200 US employees were laid off in March, plus more than 100 at the Singapore-based Apple design center, and the company said it plans to "divest non-strategic assets," although no details were provided. Amelio forecast that Apple "will do quite well in the education market" in the next quarter and that things are on track for the company to return to profitability.

Quarterly expense reductions of $125 million, announced at the time of the restructuring, should be in place by year's end, perhaps even bringing the company back to the black. Apple reported a net loss of $120 million in the December 1996 quarter and of $740 million in the second quarter of 1996.

Describing as "a shrewd investor" the Saudi prince who recently made a public splash by purchasing a 5 percent stake in the company, Amelio brushed off talk of support for Larry Ellison's potential takeover. He said that according to his sources, the Oracle CEO's well-publicized ruminations on buying Apple had not met with the approval that has been reported. Amelio also took a swipe at the press, blaming "how we are covered" and "the negative emphasis placed on us" for discouraging potential Apple customers from making purchases.

"The last 12 months have been stormy, but I'm confident that the steps we've taken will pave the way to profitability," Amelio said.